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Exploring the Difference Between HO-3 and HO-5 Policies

Protecting a home, the largest investment most make, is critical. The proper Homeowners Insurance Program that best suits the owner’s needs can be broken down into two main types: HO-3 and HO-5. While they can broadly be differentiated by the type of coverage provided to personal property within the home, there are a few other variances, as well.

HO-3: This policy provides Named Perils Coverage for personal property in the event certain dangers take place and cause damage to the home. The policy outlines the covered dangers that would be covered including: fire, lightning, explosion, smoke, volcanic eruption, vandalism, riot, aircraft, falling objects, freezing, ice, snow, and more.

It is important to note that damage that occurs outside the scope of the listed coverage can be dismissed by the insurance provider. In addition, the claimant must prove that the damage caused to the home was a direct result of that peril. Homeowners should ensure that the specific dangers they are at risk of facing are included in this policy.

HO-5: This policy is an Open Perils Coverage, or Special Coverage, that can be obtained to protect personal property. This policy gives a list of all the excluded perils, meaning anything that is not on the list is covered. Some exclusions include: nuclear hazard, war, neglect, power failure, earth movement, animals owned by insured, discharge, wear and tear, mold, and theft.

According to Investopedia, a claim due to anything that causes damage to personal property or the home wouldn’t have to be proven as resulting from a named peril. Thus, this is a more broad coverage and protects more.

So, which one is the better option? While the HO-5 policy is typically more expensive, it covers a broader scope of risks. As such, this one is recommended, if possible. At Aegis General Insurance Agency, we are here to assist with any policy questions to ensure clients obtain the best coverage for their homes. We invite you to learn more about our insurance programs by contacting our experts today at (855) 399-0966.